‘Ask an Expert’ gives you a chance to have any car finance questions answered. Below is a list of FAQs which answer a diverse range of car finance questions– feel free to browse our archived queries. At the bottom of the page is a link for you to submit your query if it has not been addressed on the site already. It is important to note that Financing Your Car does not provide definitive legal advice, so always speak to your local finance company or motor dealer. To find your local SAF-Approved dealership view our Dealer Directory.


Car Finance Information

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How much deposit will I need for a car finance agreement?

This will depend on the finance company and whether you intend buying a new or used car. Many incentivised finance agreements do not require any deposit, whereas others may ask for up to 30% if the customer is to qualify for a low interest rate. You can save money in the long term by putting down a higher deposit at the start of the agreement, which will help reduce your monthly repayments. .

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What interest rate will I be charged?

This will depend on the value of the car you are interested in buying, the type of finance you choose and the finance company which offers it. It’s therefore important to get an accurate comparison of interest rates charged on all the products you are considering. To do this, ask what Annual Percentage Rate (APR) would be charged and use it to compare all of your different finance options. Always use the APR rather than any other interest rate because it includes other charges such as administration fees. All finance companies are obliged to state the APR on finance documentation.

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Can I reduce my monthly payment?

You can reduce your monthly repayments by putting down a larger deposit at the start of a finance agreement or by deferring a lump sum until the end of the agreement. Deferring a lump sum (also known as a balloon payment) is only an option under certain finance agreements. You should talk to your local showroom about the options available to you.

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Can I cancel my agreement?

Yes, but only within the first 14 days by giving written notice to the finance company. However, you will need to find alternative funding to pay for the car that you have agreed to buy as you can only cancel the finance agreement (not the purchase of goods). Make sure that you fully understand the terms and conditions before signing on the dotted line.

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Can I settle the agreement early?

Yes, but depending on the amount you wish to settle, a penalty charge could apply. This will be explained in the terms and conditions of your agreement. Speak to your finance company for further information. This guidance outlines what your options are.

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Can I sell the car?

Most agreements will require you to repay the outstanding finance before you are legally entitled to sell the car. This guidance outlines what your options are. Under an unsecured personal loan agreement you are entitled to sell the car because you already own it.

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Can I add a service and maintenance package?

Yes, most car dealers will be able to add a service and/or maintenance package.

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I have bad credit; can I still get car finance?

A number of specialist lenders work with customers who have experienced credit problems in the past. They are listed in our member directory.

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What if…..? Questions about your agreement.

This is general guidance only. You should talk direct to your finance provider or seek advice if you are unhappy about any aspect of your finance.

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I have recently bought a car on finance. However, since then, I now need a bigger car. What should I do?

The options available to you will depend on the type of finance agreement you have entered into. For example, if you have taken out an unsecured personal loan then you may sell the car and use the funds to buy an alternative car. However, if it is a secured agreement (e.g. hire purchase) then the car is the property of the finance company.

You should contact your finance company immediately to discuss the options that are available to you.

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I am considering leasing a car. How do I get the best deal?

Visit the ‘Your finance options’ tool above, and answer a few simple questions to help you work out what might be the best product for your needs.

As ever, the key to finding the best deal is to shop around. Use our ‘dealer directory’ to find your nearest SAF Approved showrooms who should be able to help you find a lease deal.

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At what age do I not need a guarantor?

Whether the use of a guarantor is right for you is not necessarily just linked to your age. Your credit history, or credit rating, is an important factor, as well as how much deposit you have to put towards a potential agreement. Your local dealership will inform you of how best to proceed with an application for finance, based on your specific circumstances.

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If I lease a car over 3 years, what happens after the 3 years? Is no money built up in the car?

Under a lease agreement, you are effectively ‘renting’ the car from the leasing company. However, there are many different types of lease. Some agreements give you the option of buying the car outright at the end of the lease, while others require you to hand the car back. Be sure to carefully check the terms and conditions of your lease agreement.

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What identity documents are acceptable when applying for car finance?

A motor dealer will usually ask to see both parts of your current driving licence (the photocard and the paper counterpart), and may take photocopies. The licence will help verify your identity as well as your entitlement to drive the car that you are interested in financing. As part of the application process, credit background checks will then normally be performed by finance companies to help determine your credit rating and whether they are ultimately able to provide you with car finance.

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Can we get car finance if we have an Individual Voluntary Agreement (IVA)?

You are generally prohibited from entering into any new finance agreements as a condition of an IVA, but this will depend on the specifics of your particular IVA.

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If I die before my car finance loan ends, will my spouse have to repay the remainder of the loan?

Yes. Both the car and the outstanding debt become part of the estate of the deceased. If the estate decides to carry on repaying the agreement, because your partner wants to continue driving the car, then the finance company will transfer the agreement into her name. In many cases, the estate decides to terminate the loan and hand the car back, subject to the specific terms of the agreement. The finance company will help explain the options that are available.

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Can I enter into a higher purchase agreement while I am in a Scottish Trust Deed?

An individual is generally unable to take out new/additional credit while in a Trust Deed. You should seek out legal advice based on your individual circumstances.

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My partner has applied for car finance, but wants the car to be registered in my name. The DVLA says this is fine. Can you clarify if this is OK?

The person who applies for finance should be the person who drives the car. The terms of the finance agreement will usually state that the applicant must be in charge of the car at all times. The dealer will complete the V5 form (log-book) and return it to the DVLA using the details of the person on the finance agreement. However, it is possible to submit a joint finance application and, if approved, you can ask the dealer to put your name on the log-book.

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Do you have to have a full UK driving license?

Yes, given you are applying to buy/rent a car on finance then all finance companies will want to check your entitlement to drive that car.

A motor dealer will validate your driving licence in the showroom as part of the finance application process.

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Do I have to be 18 to apply for car finance?

Most finance companies require an applicant to be 18 before applying for finance. One reason for this is that a finance company will need to review information on you, such as your credit background, before making a lending decision. For example, at 18 you will appear on the Electoral Register which helps verify your postal address. However, you may be able to apply for finance with a guarantor (for example, a parent) and other factors such as how much deposit you are able to put down play a part. Your local dealership will inform you of how best to proceed with an application for finance, based on your specific circumstances.

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What is the FCA?

The Financial Conduct Authority (FCA) replaced the Financial Services Authority (FSA) on 1 April 2013. From 1 April 2014, the FCA will also take on regulatory responsibility for consumer credit from the Office of Fair Trading (OFT).

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Can I modify or make changes to a financed car (e.g. colour, specification, bodywork)?

It’s unlikely.  Most motor finance agreements probably won’t allow you to make any modifications unless your finance company has first authorised this – because in most cases, until you have made all the outstanding payments due under the agreement, the finance company will still be the owner of the vehicle. So you should get in touch with your finance company first before you start planning any modifications.

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